How is GDP growth rate calculated?

Answer 1

There are different approaches taken in order to calculate the GDP:

1. the expenditure method: GDP = Private Consumption + Gross investment + Government Spending + (Exports − Imports), or

GDP = C + I + S + (X+I)

2. production approach

" Market value of all final goods and services calculated during 1 year . " The production approach is also called Net Product or Value added method. This method consists of three stages:

1. Estimating the Gross Value of domestic Output out of the many various economic activities;
2. Determining the intermediate consumption, i.e., the cost of material, supplies and services used to produce final goods or services; and finally
3. Deducting intermediate consumption from Gross Value to obtain the Net Value of Domestic Output.

3. Income Approach

Total income can be subdivided according to various schemes, leading to various formulae for GDP measured by the income approach. A common one is:

GDP = Compensation of Employees+ Gross operating surplus + Gross Mixed income + taxes less subsidies on production and imports GDP = COE + GOS + GMI + TP & M - SP & M